by Natalie Bremmer 

When people think of exporting, they often picture sending their products halfway across the globe. Though this mentality is not necessarily wrong, it can oftentimes lead businesses astray from their greatest opportunity– their next-door neighbor, Mexico!

U.S. businesses would be doing themselves a grave disservice by overlooking the exporting opportunities Mexico has to offer. In 2019, the U.S. exported roughly 350,000 units of product to Mexico while simultaneously receiving 200,000 units of product in the same year– a huge opportunity while also being able to decrease shipping costs because of a much shorter travel distance.

However, as with any country, there are social and cultural norms that businesspersons should be aware of before attempting to strike a deal.

Here are the top cultural norms people should be aware of when doing business in Mexico:

Timing

Business hours typically don’t start until 9-10 a.m. at the earliest and sometimes end at 8 p.m. and have a much longer lunch break. With this, you can expect later meeting times as well as more small talk before diving right into the designated topic of the meeting.

Though it’s polite for the guests to arrive on time, it is culturally common for the hosting company to oftentimes be a bit late for meetings.

If you do have meetings over lunch or dinner at a restaurant, expect it to take even longer. Restaurant service in Mexico is usually at a much slower pace than it is in the US. Sit, enjoy the conversation, and do not rush the check.

Formalities

Always dress formally and professionally for the first meeting to make the best impression. In areas with a hotter climate, it is sometimes acceptable to dress more ‘business casual’ as it is usually too hot to wear a full suit.

Business cards are always welcome and are readily exchanged. It is best to have a business card in both English and Spanish (if applicable) for maximum outreach results.

Small gifts with your company’s logo on it are acceptable, but anything larger or of higher value may be considered as a sort of unwanted persuasion.

In addition to this, doing anything that could remotely be considered bribing or promising ‘favors’ is extremely disrespectful and is not tolerated. All final business decisions are made by those in positions of power; negotiating with anyone not in this position will achieve suboptimal results.

Also, it is not polite to perform the first initial business meeting over a meal. Meals are shared among people who are familiar and enjoy each other's company; they are typically not acceptable for people unfamiliar with each other.

Communication

When addressing someone, it is best to use their official title of Mr., Mrs., Ms., Dr. This conveys the upmost respect, tends to have the best social reaction, and is a much quicker way to build relationships.

With the presence of the Covid-19 pandemic, Americans have started to shift toward a preference of online and video call communication, but in Mexico, the preference is still face to face communication as it tends to have a more personal touch.

While communicating in person, body language is also very important to consider. Trying to seem as open and engaged as possible by not closing off your arms and nodding along to the conversation is a great starting point to have the most productive conversations.

Do not feel the need to rush into business right away, though. Business professionals in Mexico prefer to get to know their partners first by engaging in small talk to get a good assessment of their character.

Having some baseline understanding and conversational skills in Spanish is a must-have in this scenario. Your Mexican business partners might find this impressive and realize how serious your offer is, resulting in a better negotiation.

Learn More!

To expand your cultural awareness of the best business practices in Mexico, sign up to attend the Business Travelers Series: Navigating Mexico – Virtual event on August 14, 2024, at 9 am EST, this virtual event is sponsored by the Gerald R. Ford International Airport and the Michigan Economic Development Corporation.

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Natalie Bremmer was a Student Assistant at GVSU’s Van Andel Global Trade Center . She pursued an undergraduate degree in Finance, Human Resource Management, and General Management at Grand Valley State University. She enjoys lifting weights, getting lost in a good video game, spending time with friends, and going on long hikes.

What is the Harmonized Classification System (HS)?

The Harmonized Classification System is a globally recognized way to identify goods being imported and exported by assigning a standardized classification. The HS classification is used for declaring goods at the time of export in export declarations and for the purpose of filing customs entries at the time of import in the country of destination. The HS classification is used to determine duty rates and collect duties, taxes, and fees for imported products.

The Harmonized System (HS) is something every importing and export company will need to understand so proper HS classifications can be assigned to their products. Companies need to take great care in assigning HS classification and understand the compliance risks associated with their HS classification decisions.  Exporters and importers alike have a legal responsibility to properly claim and classify goods/products.

The Harmonized Classification System Breakdown

The Harmonized System (HS) is a very structured classification system made up of sections, chapters, notes, headings, and subheadings.

The United States has two published versions of the Harmonized System (HS).  For imports, the U.S. publishes the Harmonized Tariff Schedule (HTS) of the U.S. for the HS classification of imported products and the assignment of duty rates.  For exports, the U.S. publishes Schedule B for export HS classifications and the collection of statistical data.

The Harmonized System (HS) is broken down into 22 sections which act as groupings of similar chapters.

There are 97 chapters of products that are organized from least manufactured to more manufactured and logically group classifications by make or by use. The first two digits of each HS classification are the chapter number. Within each chapter, the Harmonized System (HS) provides a four-digit heading with the primary legal definition of what is to be included in that heading.  Those headings are further broken down into six-digit subheadings. The heading and subheading legal definitions are universal and all countries agree to use the same legal definitions.

While the globally recognized headings and subheadings remain constant, each country can further break down the subheadings with country-specific suffixes. In the U.S. two digits (digit 7 and 8) are added as the duty rate suffix and two digits (digits 9 and 10) are added as a statistical suffix – making the U.S. classification a 10-digit number.
See the photo above for an example using Coffee.

Why is HS Classification Important for Your Business?

First of all, for importers, the HTS classification determines the duty rates and the duties paid at the time of import so it has immediate revenue implications. Non-compliance can result in fines, penalties, and the back payment of additional duties owed.

Paying duties is a non-negotiable, so proper classification can reduce your compliance risk in the short and long run. The result will never be good when using the wrong classification. If your misclassification caused you to overpay in duties, you won’t receive a refund. If you are underpaid in duties, you are required to pay the difference, and customs will decide if you will need to pay interest, and whether or not fines and penalties will be imposed.

For exporting, HS classification is used in:

• Export documentation (ex. Commercial Invoice)
• Export Declaration
• Import customs entry in a country of destination

For importing, HS classification is used in:

• Customs and Border Protection (CBP) for customs clearance and entry

All in all, use the HS classification to your advantage. Generate proper classifications and importing and exporting will be smooth sailing.

Are You Interested in Learning More? 

GVSU's Van Andel Global Trade Center offers a yearly Fundamentals of Harmonized System (HS) Classification Training. Check out our Events page to register for this upcoming event!

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About the Contributor

Jenna Hoover worked as a student assistant for GVSU’s Van Andel Global Trade Center. At GVSU she studied Finance and Supply Chain Management within the Seidman College of Business. You can find her visiting local coffee shops or checking in on her Roth IRA. In her free time, she enjoys walking her dog, Gertrude, and hanging out with friends along the beautiful beaches of West Michigan.

Originally published 4/8/2022 - Updated 4/9/2024

FOR IMMEDIATE RELEASE

February 26, 2024

Contact: GVSU University Communications
[email protected]
(616) 331-2221

GRAND RAPIDS, Mich. — Navigating industry difficulties and challenges will be the main topic of the 25th Michigan Automotive Suppliers Symposium, hosted by Grand Valley State University’s Van Andel Global Trade Center.

The symposium, with the theme of “Momentum Matters,” will be held at the DeVos Center, Loosemore Auditorium, on the Pew Grand Rapids Campus on Thursday, March 7, from 8:00 a.m.-noon.

"The annual symposium offers the chance to hear crucial insights as businesses realign with the constantly changing fast-paced automotive sector,” said Sonja Johnson, executive director, of the Van Andel Global Trade Center. “Listen to industry experts and how they are maintaining momentum as they navigate challenges in the requirements to meet government standards, and customer needs while juggling a complex supply chain and how recent issues such as labor strikes have impacted the auto industry.”

Speakers include two GVSU alumni. Alejandra Lorenzo, who works for Stellantis North America as a supplier diversity program manager, graduated in 2014. Lorenzo is an expert in supplier diversity, risk management, project management, pre-production and international launches. Lorenzo will give the keynote presentation, “Supplier Diversity: Direct and Tangible Benefits to Create a Stronger, More Resilient Supply Chain.”

GVSU graduate Mike Wall will present “The Road Ahead: Navigating the Winding Roads of the Auto Industry,” as an industry outlook. Wall earned a bachelor’s degree in finance and now has over 20 years of expertise. As executive director of automotive analysis at S&P Global Mobility, Wall will provide an in-depth analysis of vehicle markets and technology trends.

Other sessions include a fireside chat with Munro & Associates; and a Tier 1 Supplier Panel with representatives from Pridgeon and Clay, Inc.; ADAC Automotive; Lacks Enterprises; and Warner Norcross + Judd LLP.

Each year since 1999 the Van Andel Global Trade Center has hosted more than 25 international business events in Michigan and worked with a broad variety of community partners & corporate sponsors to provide the international business community with the business training and international resources it needs to succeed on the global stage.

For more information on this event, visit the Van Andel Global Trade Center website.

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It seems like all over the internet there are guides giving advice on specific locations or countries. Some of their advice can range from very specific to extremely broad, making it all the more confusing as to what advice might carry over into a different country. But what advice do all these guides have in common?

Here are some general rules to apply when expanding your business to any country:

1. Understand the Market

Market research is absolutely vital when trying to reach a certain segment. When expanding internationally, this step is crucial. Markets vary widely by country and region, market research for a specific area/region is highly recommended.

Some things to consider while putting together market research:

• Local currencies
• Potential client base in your market segment
• Number of local competitors currently in your target segment
• Foreign competitors in the desired market segment

If performing business from your home country and shipping to a foreign country, ask yourself: Do they take my currency? Could I take their local currency? What kind of people am I trying to sell my product to? What type of people need my product? Which companies in that market are already selling a product similar to what I am trying to sell? Is that market oversaturated?

Asking and answering these types of questions can help verify that your business can become successful in your next venture.

2. Know the Regional Politics

On the outside, a venture might seem extremely viable, but if the political climate is not advantageous then everything can stop in its tracks. If governmental entities are unwelcoming to foreigners or certain types of businesses, then adjustments should be made accordingly.

 Things to look out for regarding regional politics include:

• Recently passed legislation regarding the business sector your company is attempting to enter
• Any tariffs or exceptional high duties
• Past and present tensions between the country of origin and the country your business is attempting to expand to

Has the country you’re operating from been at odds with the country you are trying to perform business with recently? Have the respective governments responded by putting tariffs and other restrictions on each other? Such actions would make trying to get your product within that country extremely expensive and could potentially ruin the competitive advantage you once held over your foreign competitors.

Additionally, if the country residents are highly involved in these politics, they might boycott your product anyway. It is important to consider this a highly relevant factor when attempting to expand internationally.

3. Study the Culture

The culture difference can be a make-or-break point when introducing a new business within a foreign culture. Certain topics might be considered more taboo, other countries may hold more conservative values, and different countries might have almost no boundaries at all.

Here are some techniques to get an accurate grasp of a country’s culture:

• Analyze Their Media - If a country’s media broadcasts highly controversial or offensive content, business in this country may not be good for business. Media analysis can also often give you an idea of what’s popular with your demographic and help you advertise abroad.
• Look at Their Laws - Some countries might ban certain demographics from certain activities by the letter of their law. In that case, it would not be wise to release a product that would make those demographics legally vulnerable or unsafe.
• Know Their History - Countries historically go through phases, yet many aspects of their culture remain constant over time. It’s important to understand major historical movements that have happened within your target country, how they affected or changed the culture, and whether are not some of those impacts are still lasting today. Additionally, it is vital to identify ongoing movements and build that into your brand identity for marketing within that country.

Also, understand that cultures within countries can also vary by region as well, so the more specific an analysis is to the target area the better. It is vital to know if your product or service would transition well within a country’s culture to gauge how successful it has the potential to be. For example, avoid selling products that go against a religious belief held by the majority or confront a cultural taboo in the country you are looking to do business in. It is vital to identify whether your product has a “fit” within the culture you are trying to sell to.

With all three of these major factors in mind, you are now ready to successfully expand your business abroad and find yourself a market with the perfect fit for your product or service and the Van Andel Global Trade Center (VAGTC) can help! Whether you are a company just starting to consider global expansion or have been at it for a few years, VAGTC can help you go global or expand into new markets. With funding opportunities available for small and medium-sized businesses from the Michigan Economic Development Corporation (MEDC) through the Michigan State Trade Expansion Program (STEP), there is no better time than now to start or expand your export operations!

For more specialized information on expanding your business internationally and getting connected to the MEDC and STEP, schedule a consultation with the Van Andel Global Trade Center to answer any questions and get connected.

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ABOUT THE CONTRIBUTOR

Natalie Bremmer is a Student Assistant at   GVSU’s Van Andel Global Trade Center . She is a Senior currently pursuing an undergraduate degree in Finance, Human Resource Management, and General Management at Grand Valley State University. She enjoys lifting weights, getting lost in a good video game, spending time with friends, and going on long hikes.

Edited by Parker Mackey, a student assistant at the Van Andel Global Trade Center. 

Original publish date 5/18/2023 - Updated 2/8/2024